Lenders use your credit score to understand how risky it might be to lend to you. This score gives them an idea of how often you pay your financial obligations on time, how much credit you’re using, and whether you’ve defaulted or had CCJs.
Of course, the better the score, the less risky you are, meaning they feel more confident when providing you with a loan.
While the credit score itself isn’t the only factor in approval, it does influence how much you can borrow, the rate you’re charged, and possibly how much deposit you might need to put down. Each lender sets their own criteria, but most use reports from the big three UK credit agencies: Experian, Equifax, and TransUnion.
What Is a Good Credit Score for Car Finance?
The definition of a “good” score depends on the agency:
- Experian: 881 - 960 = Good , 961 - 999 = Excellent
- Equifax: 420 - 465 = Good , 466 - 700 = Excellent
- TransUnion: 604 - 627 = Good , 628 - 710 = Excellent
Each agency uses a different criteria to mark your ‘creditworthiness’.
However, if your score is in the good or excellent range with any of the major agencies, you’re likely to qualify for a wide range of car finance options with competitive rates. You may also get access to higher borrowing limits.
Minimum Credit Score Needed for Car Finance in the UK
But what if you don’t have a good or excellent score? Great question, thought you’d never ask.
There’s no fixed minimum credit score, per se. Here’s a general rule of thumb using Experian scores:
- Excellent (961+) – Pre-approved for most lenders, should have almost no trouble
- Good (881–960) – Likely approved with low deposit, but not the same rates as those with an excellent score
- Fair (721–880) – May be approved, likely at the higher end of the rates that they provide
- Poor (561–720) - Will likely need a strong stream of income, ask for a relatively low amount, and put down a good chunk as a deposit (20%+), but chances are low
- Very Poor (0–560) – Likely to be declined or required to take out finance with lenders that specialise in very poor credit scores
Remember, these aren’t hard cut-offs. Other factors, like your income, the car’s value, or how much you’re putting down on the car can also affect approval.
Can You Get Car Finance with Poor Credit?
Yes, you can still get car finance with a low credit score. While your options are limited, there are lenders and brokers in the UK who specialise in car finance for those with poor or very poor credit scores.
However, you’ll likely face higher monthly payments, need to provide a guarantor, or the need for a larger deposit.
How to Improve Your Credit Score Before Applying
Before applying for car finance, it’s a smart move to boost your credit profile. Start by checking your credit report for free using services like:
- Experian
- ClearScore
- Credit Karma
Make sure your name and address are on the electoral roll, pay down any existing debts, and avoid making too many applications in a short time. Settle any late payments and aim to reduce your credit utilisation below 30% of your available limit.
You can also apply for a credit builder card, but just be careful. Don’t take on too many liabilities at once. Focus on catching up on your current payments, and then slowly work your way up. It’s doable, we believe in you 😄 👍.
You can find a more in depth guide to improving your credit score on our blog, which also provides ways to do it whilst staying Halal.
Improving your score by even 50 points could mean better finance terms and save you hundreds (or thousands) over the lifetime of the agreement - so it’s definitely worth it.
Do Ayan and Other Shariah-Compliant Car Finance Options Use Credit Scores?
Most lenders perform credit checks to assess your risk, and some may perform hard credit checks. Hard credit checks impact your credit score, as well as signal to other lenders that you may be getting loans elsewhere.
Ayan does look at our applicants credit history. However, we only perform soft credit checks. This means that your credit score won’t be impacted when we assess your credit.
That’s why, even if your score isn't all the way there, might as well try your luck and make an application to see if we can approve you - of course, we want to approve as many applicants as possible whilst remaining responsible lenders.
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